The dollar gained on Friday after President Donald Trump announced plans for reciprocal tariffs on multiple countries, though details remained unclear. Trade uncertainty overshadowed U.S. jobs data, which showed slower job growth in January, an unexpected drop in unemployment to 4.0%, and faster wage growth.

Fed Officials Signal Cautious Approach to Rate Cuts

Minneapolis Fed President Neel Kashkari said the labor market remains strong, while Chicago Fed President Austan Goolsbee suggested rates could be "a fair bit" lower in 12-18 months, depending on inflation trends. Fed Governor Adriana Kugler stressed the importance of holding rates steady amid trade policy uncertainties.

Euro and Pound Weaken as Trade and Rate Cut Risks Mount

• EUR/USD: Fell 0.58%, dropping to 1.0305 as tariff concerns and ECB rate cut expectations weighed on sentiment.
• GBP/USD: Declined 0.27%, pressured by cautious market sentiment and BoE rate outlook.

USD/JPY Rises Slightly as Trade Talks Continue

• USD/JPY: Edged 0.16% higher, following a meeting between Trump and Japanese Prime Minister Shigeru Ishiba on trade and North Korea.
• Yen Crosses: EUR/JPY and GBP/JPY fell 0.57% and 0.28%, reflecting yen safe-haven demand.

Commodities Mixed as Trade Fears Weigh on Risk Sentiment

• Oil: Rose 0.58%, supported by supply concerns.
• Gold: Up 0.2%, benefiting from policy uncertainty.
• Copper: Surged 3% on industrial demand optimism.

Equities Struggle, Yields Rise on Trade Fears

Treasury yields rose 5-7 bps, with the 2s-10s curve flattening slightly to +21.8bp. The S&P 500 fell 0.76%, led lower by consumer discretionary and tech stocks.

Market Outlook: Volatility Ahead on Trade and Rate Expectations

With tariff risks, Fed signals, and geopolitical tensions driving sentiment, markets remain poised for further volatility as investors assess trade developments and economic data in the coming weeks.